Telecity passes German hurdle in Interxion bid

TELECITY was given the go-ahead by German regulators yesterday to proceed with its all-share merger with Interxion Holding.

The European data centre operator announced its intention to merge with its US-listed rival Interxion in February in a deal which would create a new entity with a combined value of $4.5bn (£3.07bn). Under the proposal, Telecity shareholders will own 55 per cent of the combined company, with Interxion investors getting a 45 per cent stake. The primary listing for the new firm will be on the London Stock Exchange.

The decision by the German Federal Cartel Office has allowed the deal to pass phase one under the country’s merger laws. However, it is still subject to further approvals, with Telecity saying it expects to complete in the second half of 2015.

Until the merger is finalised, both firms will continue to compete with each other, with annual revenue growth at Interxion for the last year double that of Telecity at 15 per cent.

By merging the two firms, Telecity said it expects to make around £600m in synergies as both companies are well entrenched in western Europe.

The focus for the mergered entity will be on “fewer and larger builds”, according to Interxion chief executive David Ruberg, who will also head the new company for one year. The combined entity will also be able to take advantage of its new clout to explore expansion opportunities in the US and Asia. The merger comes as other data centre operators are looking to boost capacity as global internet traffic is predicted to triple over the next five years, according to Cisco Systems. Mobile data usage is set to rise elevenfold.